FEDS SUE DEUTSCHE BANK FOR TAX FRAUD DATING BACK TO 2000

Posted On: December 9, 2014

NEW YORK (InsideBitcoins) — Federal prosecutors with the U.S. Attorneys Office in Manhattan are suing Deutsche Bank, stating that the German bank owes the US Government roughly $190 million in unpaid taxes. The claims of tax evasion stem from gains related to the sale of Bristol-Meyers shares in 2000. Prosecutors are claiming that Deutsche Bank deferred profits related to the sale in three different shell companies. Wells Fargo has been named as a defendant in the case due to their position as a trustee in one of the shell companies.

Follow the money

Prosecutors have laid out the methods in which Deutsche Bank allegedly attempted to avoid taxes after the purchase of a company that held shares of Bristol-Meyers. It is alleged that the bank gained roughly $100 million in profits from a later sale of the shares, and they did not wish to pay capital gains taxes on that money. The amount the prosecutors wish to get out of Deutsche Bank is much larger than their initial gains due to fourteen years of interest and penalties on the owed taxes.

In an attempt to hide their tax obligations, Deutsche Bank sold the shares of Bristol-Meyers to three separate shell companies. The bank then claimed that they first acquired the stock at the new, higher valuations, which means they would not be liable for capital gains taxes accrued while they were holding the assets on their own books. The end-goal of their transaction scheme was to make the shell companies liable for the capital gains taxes.

“Through fraudulent conveyances involving shell companies, Deutsche Bank tried to make its potential tax liabilities disappear,” said Manhattan U.S. Attorney Preet Bharara. “This was nothing more than a shell game. This lawsuit seeks to hold Deutsche Bank and the other defendants liable for $190 million in taxes, penalties, and interest owed to the United States taxpayers.”

14 years later…

The odd thing about this story is that the alleged tax evasion took place fourteen years ago. In fact, Deutsche Bank has claimed that they already reached a settlement on this matter with the IRS back in 2009.

Tax evasion in the banking industry is certainly not a new phenomenon, but tax avoidance is still something that is left mainly for the rich and powerful. It’s possible that bitcoin could be a tool used to democratize tax evasion for all individuals — rather than just those who have access to the luxury of an offshore bank account.